New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1887-01-12
RAILROAD INTERESTS.
MR.. DEPEw ADVISES A SETTLEMENT.

REPLY TO CRITICISMS on THE LAKE sH0RE-THE
FACTS ABOUT TIE NICKEL PLATE DECISION.
In the course of conversa'lon the Nickel Plato
decision yesterday, President Chauncey NJ Depew
said:
.Ihere is apparently Misunderstanding OF the posi-
to, of the Lake Sho and an unjust criticism of the
drectors This has been specially the case recently
with The London Standard" The history OF thu
Nickel Plate up 10 it's acquisition by the Vanderbts
pretty well known. Every one recognizes that the
roan was built to compel the Lake Shore to buy 1t
and Tor no o'her purpose. Alter tho Lake Shore took
control 1t found that In order to meet outstanding
obligations shape of notes due and to paw for out
standing land contracts. II necessary to create
aecona mortgage rhe Nickel Plate also became in
debted 10 the Lake Shore tor several hundred thou
sand dollars. Finally the Nickel Plate was compe led
10 default on its interest and tho first mortgage
hopdholders brought suit for foreclosure II evil
dent that this would wipe out not only the moneys
due tho Lake Shore. but the S65OO,O0Ot had in
Voted III the stock Now, what was the Guty OF the
Lake Shore directors! AZ trustees surely it was to
End on u-t where they stood. When confronted
with tvs state OF affairs they sent for the best legal
talent to he found in Ohio and SIMPLY asked tor infor
nation 20 what their legal position was when the
next conference was held the counsel reported TINT
they Ind been amazed ut the result Of the invesiga-
tionS They had found that the companies which were
odatcd TO form the Nickel Plate not legal or
cauzt,ons and that the Issue of the first mortgage was
fraudulent The dire tors had made coihsve contracts
reived as constructors several times the amount the
oad actually cost The original pre-, ec'ors in order
70 urot.ct themselves much ~ possible from III uie
liability ne elected in some ST ties To comply with
the requirements Of the law necessary to create cor
poration. This vitisted tue consolidation
With this condition OF affairs before them the PLAIN
and imperative duiy of the Lake Shore directors was
70 Ask court Of equts 10 determine their rights aud
liza ilities Ia the matter for ey were threatened not
on with the loss OF the large invested hut also
a contingent Inability ne Nickel Plate stockholdera
Their duties TO Their htockh, ders required nothing
le.a The court holds that the first mortgage Is IN
valid tccause of its fraudulent inception ana issue
Bn, the de tactic corporation which created the second
MORTGAGE had the power 10 incur debts IN order TO
m Ike tho properly available for railroad purposes.
All that the Lake lore directors did was to ask Tor
legal declaration Of their RI hts and their duties
when tho extraordinary condition NJ tho Ncke flate
organization brought to their attention Nv this
tAreatf ned foreclosure. Their only method Tor ac-
ompli,ing this was under the forms OF law 10 place
an the facts before the court aud await ia DECISION
Neither The VanGcrhits tho Lake Shore directors
arc m any wsy responsible for the creation of tho
Nickel Plate road Tor the Issue OF these securities
or for The facts upon which the court was compelled
10 render IT'S Judgment There Is no dispohtion on
the part Of the Lake Shore directors 10 lake undue
ADVANTAGE Of these conditions. They favor an equit-
abla adjustment of all interests IN tho property.
There can bc Of course appeal from the present
derision and long Irrigation. but there can DO no
doubt that now il the time tor all parties IN TINS h.ga
ton 10 get together ami arrive ut friendly settle
men"